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Chapter 10-7

# Chapter 10-7 - 140,000 x \$1.80 C = 252,000 Accumulated...

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CHAPTER 10 TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS Answers to Problems 25. (30 minutes) (Prepare financial statements for a foreign subsidiary and then translate them into U.S. dollars) Fenwicke Company Subsidiary Income Statement LCU U.S. Dollars Rent revenue 60,000 x \$1.90 A = \$114,000 Interest expense (10,000) x \$1.90 A = (19,000) Depreciation expense (14,000) x \$1.90 A = (26,600) Repair expense (4,000 ) x \$1.85*H = (7,400 ) Net income 32,000 \$ 61,000 * Repairs is the only expense which is not incurred evenly throughout the year. Statement of Retained Earnings LCU U.S. Dollars Retained earnings, 1/1 - 0- -0- Net income 32,000 (above) \$61,000 Dividends paid (5,000 ) x \$1.80 H = (9,000 ) Retained earnings, 12/31 27,000 \$52,000 Balance Sheet LCU U.S. Dollars Cash 41,000 x \$1.80 C = \$ 73,800 Accounts receivable 10,000 x \$1.80 C = 18,000 Building

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Unformatted text preview: 140,000 x \$1.80 C = 252,000 Accumulated depreciation (14,000 ) x \$1.80 C = (25,200 ) Total assets 177,000 \$318,600 Interest payable 10,000 x \$1.80 C = \$ 18,000 Note payable 100,000 x \$1.80 C = 180,000 Common stock 40,000 x \$2.00 H = 80,000 Retained earnings 27,000 (above) 52,000 Translation adjustment (below) (11,400 ) Total liabilities and equities177,000 \$318,600 Computation of Translation Adjustment Beginning net assets-0--0-Increase in net assets: Issued common stock 40,000 x \$2.00 = \$ 80,000 Net income 32,000 (above) 61,000 Decrease in net assets: Dividends paid (5,000 ) x \$1.80 = (9,000 ) Ending net assets 67,000 \$132,000 Ending net assets at current exchange rate 67,000 x \$1.80 = 120,600 Translation adjustment (negative) \$ 11,400...
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Chapter 10-7 - 140,000 x \$1.80 C = 252,000 Accumulated...

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